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Albertsons Companies (ACI)
NYSE:ACI
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Albertsons Companies
(NYSE:ACI)
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Rating:54Neutral
Price Target:
$16.50
▼(-4.18% Downside)
The score is held back primarily by high leverage and weakening margins, plus bearish technicals with the stock trending below key moving averages. These are partially offset by supportive valuation (low P/E and ~3.7% yield) and a constructive earnings-call backdrop with narrowed guidance, strong digital/pharmacy execution, and continued capital return plans, albeit with notable near-term headwinds.
Positive Factors
Digital & E‑commerce Scale
Sustained 21% digital growth and rapid delivery capabilities signal a durable shift to omnichannel retail. Higher digital penetration diversifies revenue, improves customer retention, and enables lower marginal cost per sale over time, strengthening resilience vs. store-only models.
Pharmacy & Health Momentum
Strong pharmacy growth broadens higher-frequency, stickier revenue beyond groceries. Health services and prescriptions create recurring transactions and margin diversification, helping stabilize revenue through cycles and providing leverage for cross‑sell and in‑store traffic over the medium term.
Cash Generation
Improving trailing cash flow provides durable flexibility to fund capex, investments in tech, dividends and buybacks. Strong FCF supports productivity initiatives and refinancing, reducing reliance on external financing and enabling strategic execution over the next several quarters.
Negative Factors
High Leverage
Very high leverage materially limits balance‑sheet flexibility and increases refinancing and covenant risk. Interest obligations constrain free cash flow allocation to reinvestment and increase vulnerability to margin or sales downturns, making operations more sensitive to shocks.
Compressed Profitability
Declining net margins reduce the firm's buffer against cost increases and weaken internal funding for growth. Sustained margin compression erodes return on invested capital, heightens sensitivity to volume declines, and limits ability to fund structural initiatives without cutting costs.
Medicare Drug Price Regulation
The Medicare drug‑price negotiation is a structural regulatory change that reduces reported pharmacy sales comps and introduces ongoing top‑line volatility. Even if profit impact is managed, it complicates forecasting and may require strategic repricing or product mix shifts long term.
Albertsons Companies (ACI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.56B
Dividend Yield3.49%
Average Volume (3M)8.77M
Price to Earnings (P/E)10.7
Beta (1Y)0.07
Revenue Growth2.08%
EPS Growth-1.63%
CountryUS
Employees108,300
SectorConsumer Defensive
Sector Strength42
IndustryGrocery Stores
Share Statistics
EPS (TTM)0.72
Shares Outstanding513,913,150
10 Day Avg. Volume10,442,184
30 Day Avg. Volume8,773,882
Financial Highlights & Ratios
PEG Ratio-0.47
Price to Book (P/B)3.52
Price to Sales (P/S)0.15
P/FCF Ratio15.91
Enterprise Value/Market Cap2.92
Enterprise Value/Revenue0.31
Enterprise Value/Gross Profit1.12
Enterprise Value/Ebitda6.93
Forecast
1Y Price Target
$22.27Price Target Upside29.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Albertsons Companies Business Overview & Revenue Model
Company DescriptionAlbertsons Companies, Inc., through its subsidiaries, engages in the operation of food and drug stores in the United States. The company's food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores. As of February 26, 2022, it operated 2,276 stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets, and Balducci's Food Lovers Market; and 1,722 pharmacies, 1,317 in-store branded coffee shops, 402 adjacent fuel centers, 22 distribution centers, and 20 manufacturing facilities, as well as various digital platforms. The company was founded in 1860 and is headquartered in Boise, Idaho.
How the Company Makes MoneyAlbertsons Companies generates revenue primarily through the sale of groceries and related products in its supermarkets. The company's revenue model is based on both in-store sales and online grocery delivery services, which have seen significant growth in recent years. Key revenue streams include the sale of perishable goods, non-perishable items, and pharmacy products. Additionally, Albertsons benefits from its private label brands, which offer higher margins compared to national brands. The company also earns income through fuel sales at its gas stations and from various promotional partnerships with vendors and suppliers. Moreover, Albertsons has been investing in technology to enhance its e-commerce platform, which is expected to further boost sales and improve customer engagement.
Albertsons Companies Earnings Call Summary
Earnings Call Date:Jan 07, 2026
(Q3-2025)
| % Change Since: |
Next Earnings Date:Apr 27, 2026
Earnings Call Sentiment Positive
The call highlighted strong execution across digital, pharmacy, loyalty, and productivity initiatives with solid Q3 results (2.4% identical sales growth, 21% digital growth, $1.039B adjusted EBITDA) and clear strategic investments in AI and retail media. Management also outlined disciplined capital allocation and balance-sheet actions. Offsetting these positives are macro-related headwinds (government/SNAP timing), the Medicare drug-price negotiation that creates meaningful top-line headwinds to comparables (noted 65–70 bps in Q4 and modeling risk into 2026), continued industry unit-volume pressure, and near-term gross margin mix impacts. Overall, the positives (accelerating digital and pharmacy growth, loyalty expansion, productivity gains and a clear transformation roadmap) materially outweigh the challenges, though the company flagged notable near-term risks that require monitoring.Q3-2025 Updates
Positive Updates
Same-Store (Identical) Sales Growth
Identical sales (ID sales) grew 2.4% in Q3; company narrowed FY25 identical sales outlook to a 2.2%–2.5% range.
Digital Revenue and Penetration
Digital sales rose 21% year-over-year in Q3; digital penetration reached 9.5% of sales. More than 50% of orders were delivered in three hours or less and >95% of delivery households are eligible for flash delivery as fast as 30 minutes.
Adjusted EBITDA and EPS
Q3 adjusted EBITDA was $1.039 billion and adjusted diluted EPS was $0.72. FY25 adjusted EBITDA guidance was updated to $3.825B–$3.875B and adjusted EPS guidance narrowed to $2.08–$2.16.
Pharmacy & Health Outperformance
Pharmacy and Health sales increased 18% in Q3, driven by immunizations, GLP-1 therapies, and core prescriptions; management expects pharmacy profitability to be near-neutral to the effects of Medicare negotiation on profit.
Loyalty Growth and Engagement
Loyalty membership grew ~12% to ~49.8 million members, with members transacting more frequently and demonstrating higher lifetime value; 40% of engaged households choose cash-off option.
Productivity and Cost Control Progress
SG&A rate (ex-fuel) improved to 24.9%, down 33 basis points year-over-year (ex-fuel); company reaffirmed $1.5 billion productivity target over the next three fiscal years and reported early benefits from labor optimization and process redesign.
Tech and AI Initiatives Showing Early Traction
New AI capabilities (Ask AI search) are delivering a reported ~10% increase in basket size among users; company is scaling AI across merchandising, labor forecasting, supply chain and digital experience with partners such as Google, OpenAI and Databricks.
Capital Allocation and Balance Sheet Actions
Q3 capital expenditures were $462 million; company returned $77 million via dividends and continued a $750 million accelerated share repurchase (ASR). Net debt to adjusted EBITDA was 2.29x at quarter end. Refinanced $1.5 billion of debt ($700M at 5.5% due 2031, $800M at 5.75% due 2034).
Retail Media Momentum
Retail media (On-site Media) delivered double-digit year-over-year growth in Q3 and the off-site ad capabilities were enhanced (added transaction capability), increasing partner ROI and campaign activation speed.
Own Brands Expansion Opportunity
Own brands penetration currently ~25% with a stated path to grow penetration to ~30%, and early launches of lower-priced campaigns showing improved unit trends and unit share in targeted divisions.
Negative Updates
Macro Headwinds: Government Shutdown & SNAP Delays
Temporary headwinds from a government shutdown and SNAP payment delays negatively impacted identical sales by approximately 10–20 basis points in Q3.
Medicare Drug Price Negotiation Impact to Sales
The Inflation Reduction Act Medicare drug price negotiation created an estimated Q4 headwind of ~65–70 basis points to identical sales (equating to ~16–18 basis points for FY25) with little to no impact to adjusted EBITDA; management warned this could materially affect comparables in 2026 (potentially up to ~125 basis points in some scenarios).
Gross Margin Pressure (Mix and Investments)
Gross margin (ex-fuel, ex-LIFO) declined ~55 basis points year-over-year in Q3, primarily reflecting mix shift to digital and pharmacy and targeted price investments, although margin improved sequentially vs. Q2.
Industry Unit Volume Weakness and Uncertainty
Company and industry continue to face unit-volume pressure; management indicated they do not expect to be at flat units by year-end and flagged uncertain Q4 unit trends driven by consumer caution and income cohort pressures.
Interest Expense Increase
Interest expense increased by $7 million in Q3 to $116 million, primarily related to borrowings associated with the $750 million ASR program.
Store Closures and Fleet Actions
In Q3 the company opened 2 new stores, completed 23 remodels, and closed 16 underperforming locations as part of portfolio optimization.
Pharmacy Revenue Reduction vs. Reported Sales
Medicare drug price negotiation reduces reported pharmacy sales (top-line pressure) even though management expects near-neutral profit impact; introduces modeling complexity and comp volatility.
Consumer Income Cohort Stress
Lower-income households are stretched and taking fewer items per trip; middle-income households show some softening and trade-down behavior; high-income customers are more price conscious — all contributing to cautious discretionary spending.
Q4 Margin and Pharmacy Seasonality
Management cautioned that Q3 pharmacy margin strength (driven by earlier flu and immunization demand) may reverse in Q4 and that Q4 pharmacy margin is typically weaker than Q3, implying pressure on Q4 gross margin relative to Q3.
Company Guidance
Albertsons narrowed fiscal 2025 guidance to identical sales of 2.2–2.5% (with an estimated 65–70 bps Q4 headwind from the Inflation Reduction Act, ~16–18 bps full‑year, with no EBITDA impact), adjusted EBITDA of $3.825–3.875 billion (including ~ $65 million in Q4 for the 53rd week), adjusted EPS of $2.08–2.16, an effective tax rate of 23–24%, and capital expenditures of $1.8–1.9 billion; management reiterated capital priorities (invest in the business, maintain/grow the dividend, opportunistic buybacks) including a $750 million accelerated share repurchase completing in early 2026 and $1.3 billion remaining on a $2.75 billion authorization, while reporting a net debt/adjusted EBITDA ratio of 2.29x. For context, Q3 results cited on the call included identical sales +2.4%, digital sales +21% (9.5% penetration), adjusted EBITDA $1.039 billion, adjusted EPS $0.72, pharmacy sales +18%, Q3 capex $462 million, gross margin 27.4% (‑55 bps YoY ex‑fuel/LIFO), SG&A rate 24.9% (‑33 bps YoY ex‑fuel/LIFO), loyalty ~49.8 million members, and a $1.5 billion productivity target over the next three fiscal years.Albertsons Companies Financial Statement Overview
Summary
Strong revenue growth and improved free cash flow support fundamentals, but profitability is constrained by low net margins, declining EBIT/EBITDA margins, and elevated leverage (high debt-to-equity/low equity ratio) that increases financial risk.Income Statement
Albertsons Companies shows a strong revenue growth trajectory, particularly with a 45% increase in TTM. However, the gross profit margin has slightly declined over the years, indicating potential cost pressures. The net profit margin remains stable but low, reflecting the competitive nature of the grocery industry. EBIT and EBITDA margins have also seen a decline, suggesting challenges in operational efficiency.Balance Sheet
The company's balance sheet reveals a high debt-to-equity ratio, which poses a risk in terms of financial leverage. However, the return on equity is robust, indicating effective use of equity to generate profits. The equity ratio is relatively low, suggesting a higher reliance on debt financing.Cash Flow
Albertsons has demonstrated significant free cash flow growth in the TTM period, which is a positive sign for liquidity. The operating cash flow to net income ratio is moderate, indicating decent cash generation relative to net income. However, the free cash flow to net income ratio is lower, suggesting room for improvement in cash flow efficiency.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 81.72B | 80.39B | 79.24B | 77.65B | 71.89B | 69.69B |
| Gross Profit | 22.24B | 22.26B | 22.05B | 21.76B | 20.72B | 20.41B |
| EBITDA | 3.61B | 4.08B | 4.53B | 4.85B | 4.87B | 3.78B |
| Net Income | 870.00M | 958.60M | 1.30B | 1.51B | 1.62B | 850.20M |
Balance Sheet | ||||||
| Total Assets | 27.09B | 29.31B | 28.79B | 28.75B | 30.77B | 29.39B |
| Cash, Cash Equivalents and Short-Term Investments | 214.50M | 339.20M | 212.00M | 477.20M | 2.97B | 1.78B |
| Total Debt | 15.43B | 14.18B | 14.24B | 15.01B | 15.30B | 16.07B |
| Total Liabilities | 24.59B | 25.92B | 26.05B | 27.14B | 27.75B | 28.06B |
| Stockholders Equity | 2.50B | 3.39B | 2.75B | 1.61B | 3.02B | 1.32B |
Cash Flow | ||||||
| Free Cash Flow | 2.08B | 749.40M | 628.20M | 700.00M | 1.91B | 2.27B |
| Operating Cash Flow | 3.98B | 2.68B | 2.66B | 2.85B | 3.51B | 3.90B |
| Investing Cash Flow | -2.60B | -1.89B | -1.75B | -1.98B | -1.54B | -1.57B |
| Financing Cash Flow | -1.41B | -684.10M | -1.18B | -3.37B | -789.50M | -1.04B |
Albertsons Companies Technical Analysis
Neutral
17.22
Price Trends
17.51
Negative
17.94
Negative
19.45
Negative
Market Momentum
-0.22
Positive
49.64
Neutral
60.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACI, the sentiment is Neutral. The current price of 17.22 is above the 20-day moving average (MA) of 17.20, below the 50-day MA of 17.51, and below the 200-day MA of 19.45, indicating a neutral trend. The MACD of -0.22 indicates Positive momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 60.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ACI.
Albertsons Companies Risk Analysis
Albertsons Companies disclosed 38 risk factors in its most recent earnings report. Albertsons Companies reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Albertsons Companies Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.29B | 15.79 | 5.29% | 0.93% | -5.42% | -20.80% | |
69 Neutral | $7.52B | 15.53 | 36.96% | ― | 16.60% | 49.76% | |
67 Neutral | $1.61B | 17.19 | 7.22% | 2.06% | 3.11% | 6.54% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
56 Neutral | $37.66B | 54.51 | 7.75% | 2.15% | -1.77% | -70.83% | |
54 Neutral | $8.56B | 10.73 | 29.65% | 3.49% | 2.08% | -1.63% | |
52 Neutral | $937.21M | -202.52 | -0.37% | ― | 7.22% | -108.99% |
* Consumer Defensive Sector Average
ACI
Albertsons Companies
17.19
-2.94
-14.59%
IMKTA
Ingles Markets
70.00
6.83
10.81%
KR
Kroger Company
61.47
2.74
4.67%
WMK
Weis Markets
66.69
1.18
1.80%
SFM
Sprouts Farmers
81.06
-57.01
-41.29%
GO
Grocery Outlet Holding
9.49
-6.85
-41.92%
Albertsons Companies Corporate Events
Executive/Board Changes
Albertsons Companies Appoints Scott Wille to Board
Neutral
Nov 14, 2025
On November 12, 2025, Lisa Gray resigned from the Board of Directors of Albertsons Companies, Inc., with no disagreements cited between her and the company or its management. Scott Wille, Senior Managing Director of Cerberus Capital Management, was appointed to the Board following her resignation as per the Stockholders’ Agreement. Cerberus, a significant shareholder in Albertsons, manages approximately $66 billion in assets and has a substantial influence on the company’s board appointments.
The most recent analyst rating on (ACI) stock is a Hold with a $21.00 price target. To see the full list of analyst forecasts on Albertsons Companies stock, see the ACI Stock Forecast page.
Private Placements and Financing
Albertsons Companies Issues $1.5 Billion in Senior Notes
Positive
Nov 10, 2025
On November 10, 2025, Albertsons Companies, Inc. and its subsidiaries issued $1.5 billion in senior notes, with maturities set for 2031 and 2034. The proceeds from these notes are intended to refinance existing debt, repay part of its revolving credit borrowings, and cover related fees, potentially strengthening the company’s financial position and flexibility.
The most recent analyst rating on (ACI) stock is a Hold with a $20.00 price target. To see the full list of analyst forecasts on Albertsons Companies stock, see the ACI Stock Forecast page.
Private Placements and Financing
Albertsons Announces $750M Senior Notes Redemption Plan
Neutral
Oct 21, 2025
On October 21, 2025, Albertsons Companies announced plans to redeem $750 million of senior notes due 2026, with the redemption expected on November 20, 2025. The company also revealed a new offering of $1,250 million in senior notes due 2031 and 2034, intending to use the proceeds to refinance existing debt, repay borrowings, and cover related expenses, with the offering expected to close around November 10, 2025.
The most recent analyst rating on (ACI) stock is a Buy with a $29.00 price target. To see the full list of analyst forecasts on Albertsons Companies stock, see the ACI Stock Forecast page.
Business Operations and StrategyStock Buyback
Albertsons Announces $750M Share Buyback Agreement
Positive
Oct 15, 2025
On October 14, 2025, Albertsons Companies announced an accelerated share repurchase agreement with JPMorgan Chase Bank to buy back $750 million of its common stock, as part of a broader share repurchase program increased to $2.75 billion. This move, reflecting confidence in the company’s valuation and strategy, is expected to enhance shareholder value by repurchasing approximately 8% of its outstanding shares, with completion anticipated by the first quarter of 2026.
The most recent analyst rating on (ACI) stock is a Hold with a $20.50 price target. To see the full list of analyst forecasts on Albertsons Companies stock, see the ACI Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.